BARRATT DEVELOPMENTS SOCIO-ECONOMIC FOOTPRINT FY2016

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1 BARRATT DEVELOPMENTS SOCIO-ECONOMIC FOOTPRINT FY2016 OUTPUT DESCRIPTIONS REPORT September 2016

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3 INTRODUCTION This report has been prepared by Nathaniel Lichfield & Partners ( NLP ) to accompany the Barratt Developments Plc ( the Group ) Socio-Economic Footprint for the financial year ( FY2016 ). The purpose is to provide supplementary description and commentary of the various social, economic and environmental outputs generated by the Group s activities, and how these have been derived. Background The analysis of Barratt s socio-economic footprint across the UK economy follows on from the economic footprint analysis undertaken by NLP for Barratt in 2013, 2014 and Although Barratt regularly assesses the economic benefits of single housing developments as part of the planning process, the 2013 assessment was the first time this type of analysis had been undertaken to illustrate the entirety of Barratt s economic footprint at a national level. For the 2014, 2015 and 2016 financial years, the range of indicators reported has been expanded to help measure some of the social and environmental impacts of Barratt s operations. The assessment draws upon data collected through the internal Corporate Sustainability Questionnaire ( CSQ ) which gathers information from each of the individual trading divisions, and well as data held by Group Finance and Procurement. This data has been supplemented by reference to published research, national statistics, and datasets held by such companies as Experian, to estimate these socio-economic impacts. The analysis provides only a partial snapshot of the ways in which Barratt s operations contributes to the UK economy and the local communities in which it operates, and the methodology and output indicators will continue to be developed in future years. Output Descriptions Report 1

4 INVESTING IN NEW HOMES New Dwellings The number of new dwellings constructed across Barratt schemes in FY2016 was 17,319, including 1,414 dwellings built through joint ventures. Of these, 2,969 (including joint ventures) were affordable units. These indicators are based on data collected by Group Finance. Land Development The upfront costs associated with the development of new housing includes a number of key land investments such as land acquisition costs, which is estimated to equate to 1.1 billion for Barratt schemes in FY2016. Approximately 48% of Barratt s legal unit completions in FY2016 were built on previously developed land (i.e. brownfield sites). These indicators are based on data collected by Group Finance. Leithfield Park, Milford 2 Barratt Developments Socio-Economic Footprint FY2016

5 EMPLOYMENT AND SKILLS DEVELOPMENT Employment The 55,614 jobs generated by Barratt s development activities is a summation of the jobs directly supported by Barratt, its sub-contractors, and the suppliers (for example of construction materials and equipment), as well as induced jobs that are estimated to be supported in the economy through the wage spending of these workers in shops, services and other businesses throughout the UK economy. When compared with the 17,319 new homes delivered by Barratt in FY2016, the combined effect of direct, indirect and induced employment is equivalent to 3.2 jobs per dwelling. The total employment impact of Barratt s development activities is estimated based on the following data sources and assumptions: 1. Direct Barratt jobs are based on the data collected by Group Finance and represent the average number of Barratt employees during the FY Sub-contractor jobs are based on the uplift in the total number of subcontractor companies with which Barratt trades in FY2016 (a total of 6,846), assuming the average number of workers employed by these companies is equivalent to 2013 levels (i.e employees per company). 3. Supplier jobs are based on the uplift in the number of supplier companies with which Barratt trades in FY2016 (a total of 5,905), assuming the typical number of workers supported in these firms is equivalent to 2013 levels (i.e employees per company). 4. Induced jobs are based on an employment multiplier of 1.64 to capture the additional level of employment supported in shops, services and other businesses in the national economy from the wage spending of those workers involved with the developments (i.e. Barratt workers, subcontractors and suppliers) 1. Economic Output The overall employment impacts of Barratt s development activities generate a significant amount of economic output in the national economy, equivalent to approximately 3.1 billion of Gross Value Added (GVA) in FY2016. GVA is a measure of the value of goods and services produced in an area, industry or sector of an economy. The 3.1 billion relates to all jobs supported by Barratt, its subcontractors and suppliers, as well as the induced jobs supported in shops and services from increased wage spending. This estimate is based on the latest GVA per worker averages produced by Experian which are applied to the different types of employment supported by Barratt. Construction GVA is used as a proxy for Barratt s directly employed site based construction staff as well as subcontractor and supplier employment. A blend of office based sectors 2 is used as a proxy to estimate the GVA generated by the remainder of Barratt s directly employed staff. This provides an estimate of the overall economic output (measured by GVA) contributed by Barratt s operations in FY2016. Skills Development Barratt is committed to developing the skills of its employees and provides important opportunities for younger people and those entering the labour market for the first time. A total of 268 graduates, trainees and apprentices were employed directly by Barratt in FY2016. This indicator is based on data collected by Group Finance. Supply Chain Networks The 6,846 subcontractor companies supported by Barratt are employed during the construction phase to build out the residential schemes, while the 5,905 supplier companies support these building activities by providing the materials, equipment and services required during construction. These indicators are based on data collected by Group Finance. Some 90% of the materials used within Barratt schemes are sourced from manufacturers based in the UK. This indicator is based on data collected by Group Procurement. 1 The employment multiplier of 1.64 is based on the regional employment multiplier of 1.44 provided in the HCA Additionality Guide (2014), with an uplift made to the multiplier to reflect the national scale of impacts. 2 Comprising real estate, professional services, admin & support services, telecoms, computing and IT, media activities, finance and insurance activities. Output Descriptions Report 3

6 SUPPORTING PUBLIC SERVICES Tax Payments The operational and development activities of Barratt in FY2016 generated around million of tax revenue, in the form of Corporation Tax, National Insurance, PAYE, Stamp Duty Land Tax and local Council Tax on new dwellings. The estimate of Corporation Tax, National Insurance, PAYE and Stamp Duty Land Tax generated by Barratt in FY2016 is based on data provided by Group Finance. The Council Tax generated by legal completions in FY2016 is estimated by NLP by applying the average national charge for 2015/16 to the dwellings built during FY2016 and profiled to Council Tax bands based on individual unit sales values (provided to NLP by Group Finance). New Homes Bonus The New Homes Bonus matches for a six year period the increase in Council Tax income from new homes, or homes brought back into use, with a premium payable on new affordable units. Housing development undertaken by Barratt in FY2016 is estimated to have generated New Homes Bonus payments of approximately million, using assumptions from the Government s latest official New Homes Bonus calculator (December 2015). This estimate is based on the amount of Council Tax generated by the new homes built during the FY2016 year, and a premium is paid for each affordable unit constructed (at a rate of 350 per affordable unit). These New Homes Bonus payments are then profiled over a six year period. It should be noted that the Government is currently consulting on potential options to change the New Homes Bonus in order to better reflect authorities delivery of new housing. This could include reducing the number of years for which the Bonus is paid from the current six years to four years. The Chocolate Works, York 4 Barratt Developments Socio-Economic Footprint FY2016

7 BUILDING STRONGER COMMUNITIES Resident Expenditure The amount of spending in shops and services by residents of the new homes completed by Barratt in FY2016 is estimated at million, supporting in the region of 3,113 jobs within businesses throughout the UK economy. This estimate is calculated by applying average household spending levels derived from the ONS Family Spending Survey 2014 (2015 edition) to the number of completed units in FY2016 and assuming that a share of this spending is captured within shops and other services 3. These expenditure levels can then be applied to a national average turnover to job ratio (taken from the ONS Business Population Estimates for the UK and Regions 2015 (published October 2015)) to estimate the number of jobs in shops and services that could be supported by this additional expenditure across the UK economy. Community Contributions The development schemes built by Barratt in FY2016 not only provide new housing units, but also accommodate a number of community facilities, including school places for 4,382 students and 113 local facilities including sports and leisure, health, youth and community centres. Alongside direct provision of new community facilities, in FY2016 Barratt also made contributions to local authorities in the form of Section 106 and equivalent contributions totalling million million was also spent on physical works benefiting local communities including highway and environmental improvements and community facilities. These indicators are based on data collected by the CSQ. 3 National average household expenditure levels per week for different socio-economic groups is provided in the ONS Family Spending Survey (2015 edition), including 461 for the All Households group and 333 as an average across the Constrained city dwellers and Hard-pressed living groups. Nine Elms, Vauxhall 4 This figure for FY2016 includes 14.9 million of Community Infrastructure Levy (CIL) payments. CIL payments were not included within previous year s socio-economic footprint analysis, although the equivalent CIL payment figures for FY2015 and FY2014 were 8.8 million and 1.8 million respectively. Output Descriptions Report 5

8 SAFEGUARDING THE ENVIRONMENT Barratt supported the planting and retention of 638,136 trees and shrubs in FY2016, delivering a positive impact to local environmental conditions. In addition, 73% of all new developments incorporated the use of above ground landscape-led Sustainable Urban Drainage System (SUDS) solutions to reduce the potential impact of surface water drainage discharges. 7,850 homes achieved Code for Sustainable Homes Level 3 or above, the former national standard for the design and construction of sustainable new homes. These indicators are based on data collected by the CSQ. Barratt schemes have integrated a number of measures to reduce the environmental impact of development during both the construction and occupation phases, including recycling around 95% of all construction waste. Waste generation has increased in the year to 6.61 tonnes per 1,000sqft, although CO2e emissions from construction have been limited to around 2.23 tonnes per 1,000sqft. As a result of Barratt schemes delivered in FY2016, 521ha of greenspace was created through the provision of public open space and private gardens. These indicators are based on data collected by the CSQ. Cane Hill, Coulsdon, Kent 6 Barratt Developments Socio-Economic Footprint FY2016

9 COMPARING PERFORMANCE AGAINST FY2015 The Table to the right provides a comparison of the various FY2016 socio-economic indicators with the previous reporting year (FY2015). The majority of the socioeconomic impacts resulting from Barratt s activities have increased in scale between FY2015 and FY2016 reflecting the overall increase in the volume of dwellings built between the two reporting years and the increased scale of activity associated with this higher rate of delivery. Socio-Economic Indicator + / - % FY2015 FY2016 Change Investing in New New dwellings constructed (inc JVs) 16,447 17, % Homes Affordable dwellings constructed (inc JVs) 3,102 2, % Land approved for investment 957m 1.1bn +14.5% Barratt homes built on previously developed land 57% 48% -9% Employment and Skills Development Supply Chain Networks Supporting Public Services Building Stronger Communities Safeguarding the Environment Direct, indirect and induced employment supported by Barratt, its subcontractors and suppliers 53,310 55, % Number of jobs per new dwelling Economic output (measured by GVA) generated by direct, indirect and induced employment 3.0bn 3.1bn +3.3% Graduates, trainees and apprentices employed directly by Barratt % Subcontractor companies supported 6,346 6, % Supplier companies supported 5,832 5, % Proportion of components manufactured in the UK 90% 90% - Tax generated by Barratt s activities (including Corporation Tax, NI, PAYE, SDLT and local Council Tax) 583m 674.2m +15.6% New Homes Bonus payments generated by new homes built (6 year payment) 140m 140.1m +0.1% Additional spending in shops and services by residents of new homes 241m 269.3m +11.7% Retail and service related jobs supported by this spending 3,010 3, % Local contributions (including affordable housing sales and s106 equivalent contributions) 392m 411.7m +5% Expenditure on physical works benefiting local communities 39m 59.2m +51.8% School places provided 4,057 4,382 +8% Local facilities provided (including sports and leisure, health, youth and community centres) % Trees or shrubs planted or retained on developments 555, , % Greenspace created through public open space and private gardens 635ha 521ha -18% Tonnes of construction waste generated per 1,000sqft % Tonnes of CO 2 e emissions from construction per 1,000sqft % Proportion of construction waste recycled 95% 95% - Homes achieving Code for Sustainable Homes Level 3 or above 7,482 7, % Proportion of developments using above ground landscape-led Sustainable Urban Drainage System (SUDS) solutions 66% 73% +7% The local contributions figure for FY2016 includes 14.9 million of Community Infrastructure Levy (CIL) payments. CIL payments were not included within previous year s socio-economic footprint analysis, although the equivalent CIL payment figures for FY2015 and FY2014 were 8.8 million and 1.8 million respectively. Output Descriptions Report 7

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